Microsoft Excel LibreOffice Calc

Danaher Corp. (DHR)


Enterprise Value to FCFF (EV/FCFF)

Difficulty: Intermediate


Free Cash Flow to The Firm (FCFF)

Danaher Corp., FCFF calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Net earnings 2,650,900  2,492,100  2,553,700  3,357,400  2,598,400 
Net noncash charges 1,266,100  911,800  441,100  267,900  1,080,400 
Change in operating capital 105,000  73,900  92,700  202,700  79,600 
Net cash provided by operating activities 4,022,000  3,477,800  3,087,500  3,828,000  3,758,400 
Interest payments, net of tax1 112,980  109,070  174,900  98,532  88,028 
Payments for additions to property, plant and equipment (655,700) (619,600) (589,600) (633,000) (597,500)
Proceeds from sales of property, plant and equipment 6,300  32,600  9,800  –  – 
Free cash flow to the firm (FCFF) 3,485,580  2,999,870  2,682,600  3,293,532  3,248,928 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).

Item Description The company
FCFF Free cash flow to the firm is the cash flow available to the Danaher Corp.’s suppliers of capital after all operating expenses have been paid and necessary investments in working and fixed capital have been made. Danaher Corp.’s FCFF increased from 2016 to 2017 and from 2017 to 2018.

Interest Paid, Net of Tax

Danaher Corp., interest paid, net of tax calculation

USD $ in thousands

Microsoft Excel LibreOffice Calc
12 months ended Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Effective Income Tax Rate (EITR)
EITR1 19.30% 16.10% 17.50% 21.80% 25.40%
Interest Paid, Net of Tax
Interest payments, before tax 140,000  130,000  212,000  126,000  118,000 
Less: Interest payments, tax2 27,020  20,930  37,100  27,468  29,972 
Interest payments, net of tax 112,980  109,070  174,900  98,532  88,028 

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).

2018 Calculations

2 Interest payments, tax = Interest payments × EITR
= 140,000 × 19.30% = 27,020


Enterprise Value to FCFF Ratio, Current

Danaher Corp., current EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Selected Financial Data (USD $ in thousands)
Enterprise value (EV) 103,496,679 
Free cash flow to the firm (FCFF) 3,485,580 
Ratio
EV/FCFF 29.69
Benchmarks
EV/FCFF, Competitors
3M Co. 20.98
General Electric Co. 25.48
Honeywell International Inc. 21.41
EV/FCFF, Sector
General Industrials 17.18
EV/FCFF, Industry
Industrials 22.54

Based on: 10-K (filing date: 2019-02-21).

If company EV/FCFF is lower then the EV/FCFF of benchmark then company is relatively undervalued.

Otherwise, if company EV/FCFF is higher then the EV/FCFF of benchmark then company is relatively overvalued.


Enterprise Value to FCFF Ratio, Historical

Danaher Corp., historical EV/FCFF calculation, comparison to benchmarks

Microsoft Excel LibreOffice Calc
Dec 31, 2018 Dec 31, 2017 Dec 31, 2016 Dec 31, 2015 Dec 31, 2014
Selected Financial Data (USD $ in thousands)
Enterprise value (EV)1 87,876,644  77,809,788  70,169,467  72,073,174  62,097,433 
Free cash flow to the firm (FCFF)2 3,485,580  2,999,870  2,682,600  3,293,532  3,248,928 
Ratio
EV/FCFF3 25.21 25.94 26.16 21.88 19.11
Benchmarks
EV/FCFF, Competitors
3M Co. 24.76 28.46 21.40 19.78 20.82
General Electric Co. 27.31 18.48 35.71 42.38 17.37
Honeywell International Inc. 19.22 22.51 21.27 18.68 19.99
EV/FCFF, Sector
General Industrials 17.22 22.13 29.18 25.19 18.53
EV/FCFF, Industry
Industrials 22.69 24.75 23.33 19.95 19.32

Based on: 10-K (filing date: 2019-02-21), 10-K (filing date: 2018-02-21), 10-K (filing date: 2017-02-22), 10-K (filing date: 2016-02-24), 10-K (filing date: 2015-02-25).

2018 Calculations

3 EV/FCFF = EV ÷ FCFF
= 87,876,644 ÷ 3,485,580 = 25.21

Ratio Description The company
EV/FCFF Enterprise value to free cash flow to the firm is whole company valuation indicator. Danaher Corp.’s EV/FCFF ratio declined from 2016 to 2017 and from 2017 to 2018.